ATO shares investment guidance

ATO trustee guidance

The ATO has released trustee guidance based on the outcomes of its letter-writing campaign to 17,700 SMSFs last year.

The ATO has released updated trustee guidance outlining its expectations in relation to SMSF investment strategies and repeated its warnings about using a cookie-cutter approach.

In an update on its website, the regulator highlighted the use of investment bands as a potential issue for trustees putting together their fund investment strategy and warned against taking a simplified approach when applying percentage values to asset classes.

“When formulating your investment strategy, it is not a valid approach to merely specify investment ranges of 0 to 100 per cent for each class of investment. You also need to articulate how you plan to invest your super or why you require broad ranges to achieve your investment goals to satisfy the investment strategy requirements,” the ATO said.

“The percentage or dollar allocation of the fund’s assets invested in each class of investment should support and reflect your articulated investment approach towards achieving your retirement goals. If you choose not to use allocated portions or percentages in your investment strategy, you should ensure material assets are listed in your investment strategy.

“You should also include the reasons why investing in those assets will achieve your retirement goals.”

The guidance, which was based on the outcomes of the ATO’s letter-writing campaign to 17,700 SMSFs last year, also pointed out trustees seeking advice on the preparation of their investment strategy would need to find a licensed financial adviser to assist them.

“Note that your usual SMSF adviser may not be a licensed financial adviser and legally capable of assisting you. They may be able to guide you on where to obtain resources such as an investment strategy template,” it said.

The regulator also urged trustees to be wary of using standard investment strategy templates when formulating their investment strategies.

“Take care when obtaining standard investment strategy templates as these may not satisfy the super rules. They must be appropriately tailored to your fund’s particular circumstances and reviewed regularly as required by the super rules,” it added.

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